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February 26, 2024

Supreme Court Rejects Apple and Epic’s Appeals, Allowing Alternative Payments in Apps

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Jan 18, 2024

The U.S. Supreme Court on Monday declined to hear appeals from Apple and Epic Games on lower court rulings related to Apple’s App Store policies and fees. The decision allows a prior ruling to stand which forces Apple to allow alternative payment processing options in iOS apps.

Lower Court Ruling Forces Changes to App Store Policies

In 2021, a U.S. district court issued an injunction ordering Apple to allow developers to include external links and other calls to action to direct users to alternative payment methods outside iOS apps. The ruling stemmed from an antitrust lawsuit filed by Epic Games over Apple’s requirement that developers use its in-app purchase system which takes a 30% commission.

Apple appealed the decision, arguing the ruling would “introduce security issues” and make it difficult for the company to maintain iPhone security standards. But on Monday, the Supreme Court rejected hearing Apple’s appeal, allowing the lower court ruling to go into effect.

The decision deals a significant blow to Apple’s business model and App Store profits. Analysts estimate Apple could lose billions per year by allowing developers to bypass its payment system.

Apple Announces Changes to App Store Policies

Shortly after the Supreme Court’s announcement, Apple said it would comply with the lower court’s orders while planning to “protect users” amid the changes.

Apple outlined updates coming in the spring to App Store guidelines, including allowing:

  • Developers to communicate with users to promote alternate payment methods
  • Links in apps directing users to webpages with payment options
  • References to payment methods not using Apple’s in-app purchase system
  • Certain categories of apps to use alternate payments without using Apple’s system at all

However, Apple said it will still charge developers a commission on alternate payment transactions occurring outside its system. Apple argues the commission helps fund App Store development, security, and discovery features.

The company said the new policy will roll out globally to all developers, but specific implementation details are still being finalized.

Mixed Reactions from Developers and Policymakers

Developers and policymakers expressed mixed reactions to Apple’s policy updates. Some see it as a partial victory:

“Allowing developers to communicate payment alternatives is a good start, but charging commissions on transactions it doesn’t process is still problematic,” said developer advocate Owen Williams. “It doesn’t solve the root problems around competition and fairness.”

“This is a step in the right direction, but Apple still has an unfair advantage,” Representative David Cicilline wrote in a statement. “App makers should not have to pay Apple tax on transactions that do not use Apple infrastructure.”

However, others argue Apple is simply complying with the court order in a limited capacity while still maintaining control.

“Despite allowing payment links, developers are no better off today than yesterday,” wrote developer David Heinemeier Hansson on Twitter. “Apple gets to have their cake and eat it too.”

Reaction Quote
Positive “Allowing developers to communicate payment alternatives is a good start, but charging commissions on transactions it doesn’t process is still problematic. It doesn’t solve the root problems around competition and fairness.” – Owen Williams, developer advocate
Mixed “This is a step in the right direction, but Apple still has an unfair advantage. App makers should not have to pay Apple tax on transactions that do not use Apple infrastructure.” – Rep. David Cicilline
Negative “Despite allowing payment links, developers are no better off today than yesterday. Apple gets to have their cake and eat it too.” – David Heinemeier Hansson, developer

What’s Next in the Legal Battle?

While the Supreme Court declination seemingly ends one phase of the Epic v. Apple legal battle, Epic Games founder Tim Sweeney said the fight is not over.

Sweeney stated Epic intends to continue pursuing legal options related to perceived anticompetitive behavior and “working to open up iOS on all fronts.” He argues Apple’s commissions and control over payments need more regulation.

Some analysts predict Epic may file fresh lawsuits challenging Apple’s new 27% commission on alternative payment transactions. Epic could argue the fee still represents an illegal “tax” on competitors.

At a minimum, ongoing legal action seems likely as policymakers debate proposals for regulating app stores. Bills focusing on interoperability, sideloading, and commission rates have faced opposition from Apple.

The Supreme Court’s move and subsequent App Store changes serve as a warning shot for Apple and other walled gardens. But whether further regulation or legal action ensues remains to be seen. For now, developers and users must adapt to a modified App Store landscape enabling more payment choice.

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AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.

By AiBot

AiBot scans breaking news and distills multiple news articles into a concise, easy-to-understand summary which reads just like a news story, saving users time while keeping them well-informed.

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